Press releases
Reignited development and reasonable investment policy (2011/04/18 9:00 PM)
(1) Following the application of the IAS 8 standard, restatement of revenue generated from the sale of electricity from wind farms owned by third parties who have contracts offering no guaranteed margins (see Note 1 of this press release). (3) Following the application of the IAS 8 standard, restatement following the correction of an error (see Note 1 of this press release).
Fady Khallouf, CEO of THEOLIA, stated: “The past difficulties continue to impact our financial statements. In 2010, the Company successfully completed a significant financial restructuring including the renegotiation of its convertible bond that led to an exceptional net financial income of 75 million euros, and a capital increase. Since then, the Company has been committed to reinvigorating its development and to continuing its clean up. At the same time, the implementation of a co-investment strategy, based on the long term, is moving forward. The goal is to attain the scale necessary to ensure the Group's profitability and to benefit from our position and the expertise of our teams in a growth sector.” 1/ Financial restructuring of the Company During the year THEOLIA completed a significant financial restructuring including the renegotiation of its convertible bond and a capital increase of 60.5 million euros. This transaction has enabled THEOLIA:
The bondholders' ability to request an early redemption of their bonds has been extended from January 1, 2012 to January 1, 2015. The bonds that have been converted since the adoption of the new terms of the convertible bond (1,381,945 OCEANEs to date) have enabled a reduction by 21.1 million euros of the maximum amount to be reimbursed in case of redemption requests from all the bondholders on January 1, 2015. To date, the maximum amount to be reimbursed would be 155.3 million euros. The Group's overall financial position has improved significantly and the financial debt will continue to decrease in line with future bond conversions.
Through the financial restructuring, completed in July 2010, the Group has regained the flexibility necessary to reignite its development. The significant plan of disposals carried out in 2009 and the first half of 2010, in order to reestablish the Group's cash position, had reduced the Group's operational capacity by 204 MW and its pipeline of projects by 90 MW. In addition, the financial difficulties encountered by the Group between mid 2008 and mid 2010 did not allow for the development of the pipeline and reduced the access to project financing of the backlog projects. The Group's new financial position has allowed for a reduction in the pace of disposals during the second half. As of December 31, 2010, the total installed capacity operated by the Group is 869 MW, of which 283 MW for own account and 586 MW for third parties. At the same time, the Group has pursued its investments at a sustained pace, but with a prudent and rigorous approach. In 2010, 41.8 million euros have thus been invested in wind projects under development, notably in Italy, Germany and France. An active management of the pipeline of projects has been reinitiated and a number of operational achievements were recorded during the second half, notably:
Since 2011, the Group has also:
The Group is focused on the completion of the projects that have secured construction permits and display profitability rates that correspond to the investment criteria that the Group has set. The goal is twofold:
At the same time, the Group is committed to improving its performance, notably by:
Lastly, the Group continues to focus on the implementation of its co-investment strategy through the establishment of an investment vehicle. The goal is to bring additional financial means to the Group to enable an even faster future growth. The work so far accomplished has enabled the Group to further discussions with top tier investors in view of a long lasting partnership.
Despite all the efforts undertaken for the turnaround of the Company since the second half of 2010, the consolidated financial statements were still impacted by certain difficulties related to the Group's past. The reduction in the installed capacity following the disposals carried out in 2009 and the beginning of 2010 reduced the operational performance of the activity Sale of electricity for own account. The main disposal of the year, having occurred prior to the financial restructuring, was not completed under favorable conditions for the Group and recorded only a very weak margin. A significant analysis has been carried out on the main subsidiary of the Group, THEOLIA Naturenergien, in Germany. The conclusions mainly relate to the activity of operating wind farms for third parties and the appraisal of the subsidiary's value. In particular, the Group has identified a significant risk of non collection on certain old debts related to the Operation activity. As of June 30, 2010, a provision for 3.6 million euros had been recorded for these debts. A more detailed analysis has led to an additional provision of 5.4 million euros as of December 31, 2010, for an overall provision of 9 million euros over the period. The Group has taken a provision for future losses related to older contracts for the management of wind farms for third parties, in the amount of 4.7 million euros. The analysis led by the Group illustrated that the production level of the wind farms in question will very likely not be in line with the revenues guaranteed by these contracts. In addition, the Group has accounted for a depreciation of 11 million euros on the goodwill in the activity Development, construction, sale in Germany. In fact, the Group has downgraded the wind farm sales targets in Germany in the “trading” activity, historical activity of THEOLIA Naturenergien, to levels that better correspond to market conditions. The valuation using discounted future cash flows illustrated an impairment on the goodwill initially recorded. Finally, the recording of an expense related to the transactional agreement executed with two members of the former management for an amount of 1.4 million euros in the context of their lawsuit against the Company also impacted the 2010 results. These negative impacts having been compensated by an exceptional income of 75 million euros (net of expenses) related to the derecognition of the convertible bond following the revision of the terms of the issuing contract, the consolidated net income yields a profit of 5 million euros.
Please note that the revenue figures published for 2009 and 2010 have been restated for the revenue coming from the sale of electricity from wind farms owned by third parties who have contracts offering no margin guarantees. In 2010, the reported revenue from the Operation activity has been reduced by 33.3 million euros and the published revenue from the Operation activity in 2009 has been reduced by 34.2 million euros (see Note 1 of this pres release). In addition, the reported 2009 financial statements have been restated in line with the IAS 8 standard following the derecognition of the assets sold over 2009 and before, having an impact on the balance sheet and income statement reported as of December 31, 2009 (see Note 1 of this press release). The Board of Directors, having met on April 18, 2011, approved the 2010 consolidated financial statements, prepared in accordance with the internationally accepted IFRS standards, after having received confirmation from its statutory auditors that the audit procedures had been carried out and that the approval certificate was in the process of being issued.
CONSOLIDATED INCOME STATEMENT The consolidated revenue amounts to 154.5 million euros for 2010, representing a decrease of 48%. This decrease reflects the change in the Group's situation. The significant plan of disposals of 234 MW of wind farms and projects, carried out in 2009 to reestablish the Group's cash position, had contributed greatly to the revenue of the Development, construction, sale activity. In 2010, the Group sold only 72 MW. The breakdown of revenue by activity is as follows:
(1) The Corporate sector does not generate revenue and is thus not illustrated in this table.
The Group's consolidated EBITDA amounts to 3.4 million euros in 2010, versus 45.5 million euros in 2009. The breakdown by activity is listed below:
As a reminder, the consolidated EBITDA recorded in 2009 benefitted from the positive effect of the reversal of two significant provisions in the Corporate activity for a cumulative amount of 25 million euros. The Group's EBITDA in 2010 was led by the Sale of electricity for own account activity, that registered a margin of 66% of revenue. This indicator was nonetheless impacted by four negative factors:
The Group's operational income establishes a loss of 34.5 million euros in 2010, versus a positive income of 26 million euros in 2009. The depreciations recorded by geographic zone in 2010 break down as follows (in millions of euros):
The Group also provisioned the future losses related to the older contracts for the management of wind farms for third parties, offering revenue guarantees, for an amount of 4.7 million euros and recorded in “Other income and non-current expenses” an expense related to the transactional agreement executed with the former management for an amount of 1.4 million euros. Lastly, the Group accounted for the following provisions for a cumulative amount of 13 million euros (in million euros):
The Group's financial income is 45.6 million euros in 2010, made up essentially of (in million euros):
In all, the net income of the consolidated entity for the full year 2010 is a profit of 5 million euros, versus a loss of 25.2 million euros in 2009. DEBT AND CASH POSITION The net debt, declining by 158.5 million euros, went from 396.1 million euros as of December 31, 2009 to 237.6 million euros as of December 31, 2010, mainly due to the financial restructuring completed in July 2010.
(1) The stated amounts correspond to the debt component of the convertible bond.
The Group's net cash position increased by 16.1 million euros over the year, notably following the capital increase completed in July 2010.
(1) SPV: special purpose vehicle. FOR MORE INFORMATION
THEOLIA
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